The Federal Reserve has delivered the biggest interest rate cut in 16 years in a sign that the central bank believes the U.S. has turned the corner on inflation and the threat of recession has become the main concern.
In making the announcement, Fed Chairman Jerome Powell said, "The US economy is in good shape. It's growing at a solid pace. Inflation is coming down, the labor market is in a strong place. We want to keep it there."
The move lowers the benchmark federal-funds rate to between 4.75% and 5%.
It's the first interest rate cut in 4 years, and is welcome news to families like the Warrens, who have been trying to pay off over $15,000 in credit card debt.
Karissa Warren said, "A reduction in interest is really a breath of fresh air because I feel like we can never get ahead. I feel like this will make a bigger dent in getting back on track."
And it's hopeful news for many first time home buyers who have been sidelined by high mortgage rates like Kate Peska, who hopes to get more house for her money.
"With mortgage rates going down, I'm excited for an opportunity to open some doors to some properties that I did not originally foresee as possible," Peska said.
The cut is an attempt to bring about a "soft landing" for the U.S. economy, and prevent the Fed's previous sharp rises in rates from tipping the economy into recession.
The Fed will meet again in November and December after the election, and analysts say it could cut interest rates again, with more cuts ahead in the next two years.
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